Rostelecom and YADRO launch a new JV to support digital transformation with integrated PaaS and IaaS

Moscow, Russia - September 16, 2020 - Rostelecom PJSC (MOEX: RTKM, RTKMP; OTCQX: ROSYY), the largest integrated digital service provider in Russia, today announces the launch of a new JV with YADRO to introduce a new portfolio of integrated PaaS and SaaS products. The purpose of this JV is to provide clients with holistic support in digital infrastructure development in the most effective way, from planning and design to implementation.

The JV "Cloud Platform" will significantly expand Rostelecom's strategic data centre business unit, bringing together Rostelecom's subsidiary TIONIKS and Digital Energy, the daughter company of YADRO (part of X-Holding). The new JV will be 51% owned by Rostelecom, with YADRO's 49% participation. The companies have already started to jointly develop a platform that will be designed to meet requirements of large businesses and state organisations (B2B and B2G) that are just starting their digital transformation journey.

Rostelecom is currently a leader among IaaS providers with more than a quarter of the Russian IaaS market of public cloud services, according to IKS Consulting. The new JV under Rostelecom's management is expected to evolve into a large cloud provider and will make significant contribution to the Company's market position in cloud by adding the PaaS capability to its well-established range of cloud services. The JV's solutions are forecasted to cover 40% of the B2C and B2G sectors, and around 15% of the SMB market by 2025.

Moreover, the transition to an integrated product line will enable better efficiency of clients' computing resources (by 15% to 17%) and will also reduce the operating costs of structure services by 20%. It will also help meet the growing demand for localised IT systems from Russian companies.

Anna Shumeiko, Senior Vice-President, the Chief of Staff of the President of Rostelecom commented: "The merger with Digital Energy will significantly enhance our data centre business. This deal is a major step towards expanding our outreach to a much larger client base with companies from various sectors of the economy, coming to us with different needs and requirements. The range of well-advanced PaaS solutions within this JV partnership will make a significant contribution to our digital services ecosystem and will strengthen Rostelecom's overall leadership in cloud."

Pavel Kaplunov, Vice President for Cloud Services of Rostelecom, commented: "The newly launched JV is our opportunity to provide Russian companies with turnkey platform solutions from the design to implementation stage, which are getting increasingly popular on the market. Moreover, we hope the extension of product portfolio driven by proprietary software solutions will sharpen Rostelecom competitive edge as well as may stimulate import substitution."

Ivan Yermakov, Product Director of Digital Energy, commented: "The merger of two successful teams will allow us to integrate our experience and competences to work on more sophisticated and large-scale projects. I am confident that this deal not only opens a new chapter for both companies, but it also marks a new stage in evolution of the entire digital market in Russia."

Further information is available at https://www.company.rt.ru/en/ir/news_calendar/.

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Rostelecom is the largest integrated digital services and products provider, operating in all segments of the telecommunications market in Russia. The Company serves millions of households, state and private enterprises across the country.

Rostelecom is Russia's undisputed market leader, providing high-speed Internet access and pay-TV. The total number of broadband users stands at over 13.4 mln users, it has more than 10.7 mln pay-TV customers, over 5.8 mln of which are subscribed to Rostelecom's IPTV services. Tele2 Russia, a Rostelecom subsidiary, is a major player in the mobile market with over 44 mln subscribers and the industry-leading NPS, a customer satisfaction benchmark.

During the first six months of 2020, the Group generated RUB 248.9 bln of revenues, RUB 95.9 bln of OIBDA (38.5% of revenue) and RUB 15.4 bln of net income.

The Group is the leading provider of telecommunications services to government bodies and corporates of all levels.

Rostelecom is a key strategic innovator that provides solutions in the following fields: E-Government, cybersecurity, data-centers and cloud computing, biometry, healthcare, education and housing & utility services.

The Group's stable financial position is confirmed by its credit ratings. Rostelecom has been assigned 'BBB-' and 'BB+' international credit ratings by Fitch Ratings and Standard & Poor's respectively, and AA(RU) by ACRA.

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TIONIKS is a developer of cloud products and solutions, operating in Russia from 2014. The Company is part of 'Rostelecom Data Centre' group of companies and a subsidiary of Rostelecom which allows best in class complex servicing to Rostelecom's clients across Russia and CIS.  TIONKS's mission is to provide a reliable and safe cloud infrastructure with seamless operation of business applications in any workload environment.  

For more information please visit  www.tionix.ru or contact pr@tionix.ru

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Digital Energy is a cloud and software developer partner and subsidiary of YADRO, Russia's leading technology and computing systems developer and provider of data storage and processing platforms.

For more information on Digital Energy and YADRO please visit www.yadro.com/en or contact pr@yadro.com

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Certain statements in this press release are forward-looking statements within the meaning of the U.S. federal securities laws and intended to be covered by the safe harbours created thereby.

Those forward-looking statements include, but are not limited to:

• Assessment of PAO Rostelecom's (the Company) future operating and financial results as well as forecasts of the present value of future cash flows and related factors;
• The Company's plans to take ownership stakes in other organisations;
• the Company's anticipated capital expenditures and plans to construct and modernize its network;
• the Company's expectations as to the growth in demand for its services, plans relating to the expansion of the range of its services and their pricing;
• the Company's plans with respect to improving its corporate governance practices;
• the Company's expectations as to its position in the telecommunications market and forecasts on the development of the market segments within which the Company operates;
• economic outlook and industry trends;
• the Company's expectations as to the regulation of the Russian telecommunications industry and assessment of impact of regulatory initiatives on the Company's activity;
• other statements regarding matters that are not historical facts.

 

Such forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from those expressed or implied by these forward-looking statements. These risks, uncertainties and other factors include:

• risks relating to changes in political, economic and social conditions in Russia as well as changes in global economic conditions;
• risks relating to Russian legislation, regulation and taxation, including laws, regulations, decrees and decisions governing the Russian telecommunications industry, securities industry as well as currency and exchange controls relating to Russian entities and their official interpretation by regulatory bodies;
• risks relating to the Company, including the achievement of the anticipated results, levels of profitability and growth, ability to create and meet demand for the Company's services including their promotions, and the ability of the Company to remain competitive in a liberalized telecommunications market;
• technological risks associated with the functioning and development of the telecommunications infrastructure, technological innovations as well as the convergence of technologies;
• other risks and uncertainties. For a more detailed discussion of these and other factors, see the Company's Annual Report and the Company's other public filings.

Many of these factors are beyond the Company's ability to control or predict. Given these and other uncertainties, readers are cautioned not to place undue reliance on any of the forward-looking statements contained herein or otherwise. The Company does not undertake any obligation to release publicly any revisions to these forward-looking statements (which are made as of the date hereof) to reflect events or circumstances upon the annual report publication or to reflect the occurrence of unanticipated events, except as may be required under applicable laws.